Why would a higher tax rate lower the government purchases multiplier? What does the tax rate have to do with the government purchases multiplier?
What will be an ideal response?
The tax rate affects how much of the additional income that results from the initial increase in government purchases is available to be consumed. A higher tax rate decreases the amount of disposable income that can be consumed at each round of the multiplier process.
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Bonds with relatively low risk of default are called ________ securities and have a rating of Baa (or BBB) and above; bonds with ratings below Baa (or BBB) have a higher default risk and are called ________
A) investment grade; lower grade B) investment grade; junk bonds C) high quality; lower grade D) high quality; junk bonds
Which of the following is not true with respect to money market mutual funds?
A) They allow small savers to pool their funds to buy a diversified portfolio of money market instruments. B) They often include securities such as Treasury bills, Treasury bonds, commercial paper, and negotiable CDs. C) They charge a small management fee. D) Most funds offer limited withdrawal by check.
A firm that faces a high-demand period followed by a low-demand period must determine all of the following for peak-load pricing except which one?
A) short-term off-peak price B) short-term peak quantity C) long-run capacity D) long-term off-peak quantity
In the above table, if this is a perfectly competitive firm and the market price of the product is $5 and the marginal factor cost of labor is $60, how many units of labor will the firm hire?
A) 2 B) 3 C) 4 D) 6